There was a flurry of FinTech earnings calls this week, with Payfare Inc., Nuvei Corporation, Propel Holdings, and Mogo Inc. all releasing first quarter 2022 results. All four FinTechs reported increased revenues in the first quarter.
Payfare reported revenue of $24.9 million, a $19.8 million increase over the same period last year, along with gross profits of $4.3 million, up $4.4 million from the previous year.
“The first quarter was a significant financial milestone for Payfare as we achieved record growth in gross profit dollars and margin,” said Marco Margiotta, CEO and founding partner of Payfare. “This demonstrates the strength of our business model and charts a path to further margin expansion over the balance of the year.”
Payfare offers mobile banking, instant payment, and loyalty-reward solutions for gig economy workers in North America. The firm’s software is used by several companies considered to be titans of the gig economy, including Uber, Lyft, and DoorDash.
The company said its active users increased to 696,362, and increase of 549,520 since 2021. Payfare noted that it’s on track to launch what it calls Paid App by Payfare in the second quarter of 2022, and is developing new products to launch over the next year, but didn’t specify what those might look like.
Payfare closed its initial public offering on the Toronto Stock Exchange (TSX) in March 2021, pulling in $65.4 million CAD. It announced an over-allotment in April, 2021 that increased Payfare’s IPO to $75.2 million.
Nuvei says earnings a “strong start” to the year
Fellow payments platform company Nuvei showed an increase in revenue from $214.5 million from $150.5 million compared to the same period in 2021. However, the company noted the increase was unfavorably impacted by changes in by changes in foreign exchange rates year-over-year of approximately $7 million.
“We had a strong start to the year, with financial results that exceeded our financial outlook for the quarter,” said Philip Fayer, Nuvei’s chair and CEO. It was an excellent quarter despite revenue headwind of $7 million from unfavorable changes in foreign exchange rates year-over year. The prospects for our business are strong and we are very well-positioned for sustainable and profitable growth.”
While revenues grew, net income decreased by $23.3 million to $4.5 million compared to net income of $27.8 million for the same period a year ago. The company attributed the loss largely to a $33.1 million increase in share-based payments to employees who joined the company as part of acquisitions completed in 2021, and other employee incentive grants.
Adjusted EBITDA for Nuvei increased 40 percent to $91.6 million from $65.5 million from the previous period in 2021.
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Among the highlights for the reporting period, Nuvei noted that it expanded its digital assets and cryptocurrency solutions in North America, claiming localized payment acceptance and payouts functionality providing liquidity, risk management, know-your-customer, risk scoring and zero chargeback guarantee capabilities. The company supported 136 coins and 97 fiat currencies as of March 31, 2022.
Nuvei reported that it added a number of new customers across what it called target high-growth verticals and regions. It also added 100 new employees in the first quarter of 2022, ending with 1,468 employees at March 31, 2022 compared with 1,368 employees at December 31, 2021.
Founded by Fayer in 2003, Nuvei offers payment solutions to retail merchants and tech and distribution companies.
Just over a year after it went public on the TSX, Nuvei closed its United States IPO on the Nasdaq under the symbol ‘NVEI’ in 2021, raising a total of nearly $425 million USD.
Propel’s revenue is up, net income is down
Propel Holdings’ earnings report mirrored Nuvei’s, similarly showing increased revenue but decreased net income. Propel’s revenue increased by 85 pecent to a record $50.5 million USD ($65.9 million CAD) in Q1 2022, compared to $27.3 million USD ($35.6 million CAD) in Q1 2021.
Net income decreased by 32 percent to $3.9 million USD ($3.9 million) in Q1 2022 from $5.7 million CAD ($7.4 million) in Q1 2021. Propel attributed the decrease to investment and increased expenses incurred to support the company’s growth in the quarter and recently launched initiatives, and to the atypical credit environment that the company experienced in Q1 2021 as a result of COVID-19 related factors. As well, Propel said the addition of costs related to operating as a public company contributed to the decrease.
“Propel’s Q1 2022 results demonstrate the impact that our team’s operational progress has had on delivering profitable growth,” said Clive Kinross, Propel’s CEO. Kinross said in the past year the company has added bank partners, expanded its geographical presence, invested in marketing, and introduced variable pricing. All of those contributed to what he called record loan balances and revenue growth in the quarter.
“Additionally, as the economy continues to reopen, we are seeing a return to the demand for credit and the transition from brick and mortar to online lending remains firmly intact. Going forward, we continue to be focused on the profitable expansion of our business and we see many opportunities to facilitate access to credit for more and more underserved consumers,” said Kinross.
Following an over-allotment option in October 2021, Propel received $70 million CAD as part of its initial public offering on the Toronto Stock Exchange, when it initially secured $61 million earlier that year. The shares trade under the symbol ‘PRL.’
Launched in 2011, Propel has developed an AI-powered online lending platform to help consumers access credit. Through its operating brands, MoneyKey and CreditFresh, Propel provides access to credit to the over “60 million underserved U.S. consumers who struggle to access credit from mainstream credit providers,” according to the company.
Propel successfully completed a $15 million preferred Series B round led by the Raptor Group in 2021.
In mid-2019, Propel closed on a $35 million credit facility with a group of lenders to provide the necessary debt capital for the growth of its CreditFresh brand. In December 2020, Propel increased the size of its CreditFresh debt facility from $35 million to $45 million.
Propel increased the CreditFresh debt facility to $120 million in 2021, adding additional debt capital partners.
Mogo’s overall results are mixed
FinTech startup Mogo posted the most mixed results of the firms, with total revenue increasing 51 percent to $17.3 million from the same quarter in 2021. At the same time, the startup showed Adjusted EBITDA loss of $5.5 million compared with a loss of $1.1 million in the first quarter of 2021. And Mogo’s net loss increased to $18.9 million compared to $2.8 million for the same quarter last year.
The year-over-year change reflected increased growth spend, Mogo’s share of Coinsquare’s net loss during the quarter of $5.6 million (versus net income of nil in Q1 2021), and an unrealized loss on Mogo’s investment portfolio of $0.4 million in the current period compared to a gain of $5.8 million in the same period last year.
Mogo said it ended the quarter with combined cash, digital assets and investment portfolio of $74.8 million, which excludes the company’s investment in cryptocurrency platform Coinsquare, which had a book value of $98.3 million as of March 31, 2022.
The year’s highlights included the formation of Mogo Ventures to manage its investment portfolio of approximately $119 million (as of March 31, 2022) spread across investments in private and public companies in the software, crypto, e-gaming and NFT industries, as well as digital assets.